Making cents: Starting a business requires a lot of paper

John P. Napolitano

Monday

Nov 26, 2007 at 12:01 AMNov 26, 2007 at 11:53 PM

Good for you -- you've finally decided to take the leap and start your own small business. But before you print up those business cards and scope out the territory for office space, there are a few pieces of paperwork that must be in place to legally operate your new venture.

Good for you -- you've finally decided to take the leap and start your own small business. But before you print up those business cards and scope out the territory for office space, there are a few pieces of paperwork that must be in place to legally operate your new venture.

If you're established as a limited liability company (LLC), a corporation or a limited partnership, you need to register your business with the state in which you reside. Registration is typically with the secretary of state (like in Massachusetts), or a separate department of corporations. For small businesses structured as a sole proprietorship, registration is handled through the city or county from where it's based.

A federal employer identification number, used to identify a business entity, is next on the check-off list for small business operators that are incorporated or established as a partnership, LLC, a C Corporation or S corporation or will have employees. Check out the IRS Web site at www.irs.gov to see how to apply for an EIN.

Now that your business is registered and its EIN on file with the government, it's time to register your business name with state or county authorities. Before you take this step, conduct some research to see if the name already is being used by someone in your general market area.

You may want to retain someone to do this for you, because doing an incomplete search could cost you if you need to change the name later. Finding a completely unique name is probably not going to happen, but you don't want a moniker that can easily be confused with another business.

It may hurt a little to write out a check for business insurance coverage, but it isn't worth the risk not to have it. You've put a lot of time, money and energy into your start-up business, so go the distance and protect it against fire, theft, litigation and other liabilities.

You're also going to need an accounting and bookkeeping system to run your small business smoothly. Unless you're both a whiz with numbers and have the time to keep track of the books, it's best to retain an accountant to conduct this vital work.

Often, a small business requires the services of an accountant just a few times a month. You can separately engage a payroll service to take care of issuing employee paychecks and making the payroll tax deposits.

John P. Napolitano is the CEO of U.S. Wealth Management in Braintree. Do you have a financial issue you want him to answer? E-mail him at biznews@ledger.com or call him at 617-786-7073.

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